Consumers are currently on and around the streets of Chinese cities. This can be seen from the data: a jump in retail sales of more than a tenth in March helped the country’s economy grow by 4.5% in the first quarter, surpassing expectations and forecasts. There are signs that the real estate market is also stabilizing.

However, demand remains uneven and the gains from lifting restrictions in 2022 to contain the pandemic will be offset. The risk is that the recovery in consumer spending is between luxuries and essentials, with the exception of large purchases made by middle-class Chinese men and women. For example, the German luxury car maker Porsche achieved record sales in China during the first quarter. However, Tencent showed in its first-quarter earnings report that payments through its app appeared to be focused on low-cost consumer items bought offline. Meanwhile, the Chinese have added another $10 trillion to their household savings. yuan ($1.4 trillion) between January and March, rekindling fears that they will continue to save rather than squander.

As for real estate, which is estimated to make up 25% of production, housing prices are recovering mainly in wealthy cities, while the crisis is concentrated domestically. Investment in construction and real estate remains low. However, with inflation at 0.7%, there is scope for targeted government stimulus to help broaden and anchor the recovery. Sending them is the problem. Fiscal spending on infrastructure reflects Beijing’s position in these circumstances because it promotes growth and job creation. However, low returns from subway lines and other similar projects in economically disadvantaged areas exacerbate the debt crisis of the country’s local authorities, which is the second most serious problem for investors after Sino-US relations, as reflected in the related Goldman Sachs study.

Any rate adjustments could lead to real estate speculation, which Chinese President Xi Jinping hates, while the business community is more concerned with sales than loans anyway. Bank loans reached a historic high of 10.6 trillion. yuan in the first quarter, but this did not affect private fixed investment, which is practically not growing. The industrial group’s profit fell 23% in March. In his speech, Cai Fang, a member of the monetary policy committee of China’s central bank, proposed to transfer 4 trillion. yuan directly to households to offset weak income growth. But the huge surprise of first-quarter GDP growth, combined with Treasury concerns about fiscal pressure, makes that unlikely. That could explain why domestic stocks underperformed in the first quarter when, if that proved deceptively favorable, the post-China restart boom may have subsided quickly.